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Questions and Answers About The Medicare Part B Premium

What is the Medicare Part B premium?

The Part B premium is the monthly amount paid by individuals for health coverage in Medicare Part B - a voluntary program that covers physician services, hospital outpatient care, durable medical equipment and other services including some home health care. The vast majority (about 92 percent) of Medicare beneficiaries are enrolled in Part B. Most individuals have the premium for their Part B coverage deducted from their Social Security, Railroad Retirement, or Federal government retirement checks.

How much is the Medicare Part B premium?

Seventy percent of Medicare beneficiaries continue to pay a premium of $104.90 in 2016 because there was no cost-of- living increase in Social Security benefits for 2016.

However, the 2016 standard premium for Medicare Part B health coverage is $121.80. Beneficiaries enrolling for the first time in 2016 will pay the higher premium, as will those who do not receive Social Security benefits. Additionally, higher-income beneficiaries are required to pay more, as shown in the following chart, based on their 2014 yearly income.

Beneficiaries who file an individual tax return with income

Beneficiaries who file a joint tax return with income

Total monthly premium amount

Less than or equal to $85,000

Less than or equal to $170,000

$121.80

Greater than $85,000 and less than
or equal to $107,000

Greater than $170,000 and less than
or equal to $214,000

$170.50

Greater than $107,000 and less than
or equal to $160,000

Greater than $214,000 and less than
or equal to $320,000

$243.60

Greater than $160,000 and less than
or equal to $214,000

Greater than $320,000 and less than
or equal to $428,000

$316.70

Greater than $214,000

Greater than $428,000

$389.80

What determines the amount of the Part B premium?

The standard Medicare Part B premium is determined by a formula contained in the 1997 Balanced Budget Act, which set the premium at 25 percent of total program costs. The remaining 75 percent of program costs are financed through general revenues. The Medicare Modernization Act of 2003 (MMA) required higher-income beneficiaries to pay a higher percentage of program costs, resulting in multiple tiers of premiums based on income.

Does the Medicare Part B premium increase every year?

Over the 50-year history of the Medicare program, Part B premiums have changed nearly every year, reflecting the changes in health care costs. From 2012 until 2015, premiums either decreased or remained the same because the growth in health care costs stabilized.  The 2016 increase reflects new growth in health care spending. However, a "hold harmless" provision in the Social Security Act mandates that the Part B premium increase cannot exceed any beneficiary's cost-of-living adjustment (COLA) in their Social Security check. As a result, the net amount of the individual's Social Security check will not decrease. 

 

Government Relations and Policy February 2016



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